NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the Denver Arena Trust (DAT) 'BBB-' rating on
approximately $9.7 million in outstanding revenue-backed notes. The
Rating Outlook is Stable.

KEY RATING DRIVERS

--Strong Underlying League Economics: The National Basketball
Association (NBA) and the National Hockey League (NHL) maintain strong
historical fan and sponsorship support demonstrated by solid attendance
and viewership levels despite labor disputes.

--Two Major Anchor Tenants and Experienced Operator in Robust
Metropolitan Area: Home to the NBA's Denver Nuggets and the NHL's
Colorado Avalanche, the Pepsi Center is the only modern arena in
Colorado. Both tenant franchises are popular in the region with stable
fan bases. Kroenke Sports and Entertainment, LLC, operates the facility
and has reinvested adequately in the arena and associated amenities.
Denver-Aurora-Broomfield service area data indicate wealth levels and
unemployment rates favorable in comparison to both statewide and
national averages.

--Expected Stability of Collateral: Renewal risk and price sensitivity
associated with arena suite licensing agreements has heightened,
especially against the backdrop of the sluggish economy and the last two
years of partial-season labor stoppages in the NBA and NHL.
Nevertheless, as a result of the recent negotiations of collective
bargaining agreements (CBAs) in both leagues and scheduled maturity of
the notes this coming November, Fitch does not foresee a likely scenario
that would inhibit the trust from making the final scheduled payments of
principal and interest on time and in full this coming November.

--Narrow but Contractual Revenue Pledge: Though a narrow pledge of
luxury suite agreements and two sponsorship agreements secures the
notes, the revenues are mostly contractual, and the gross claim on these
revenues protects bondholders from margin volatility at the arena
operating company level.

--Flexible Debt Structure and Adequate Financial Resources: DAT reported
relatively stable debt service coverage ratios in the 1.3x range from
2006 through the principal payment in November of 2011 on scheduled
principal and interest payments. However, the last two years of lockouts
led to materially lower coverage of scheduled payments for the years
ended November 2012 and November 2013 of 1.2x and 1.1x, respectively.
The structure allows for a flexible amortization profile under which
principal repayments can be deferred until legal maturity in November of
2019 without triggering an event of default, still over four years
before the team leases expire. The target maturity date is November
2014, however, and the trust has historically elected to meet that
schedule to amortize the debt more quickly. DAT projects to meet its
final scheduled amortization payment this November.

RATING SENSITIVITIES

--Suite contract defaults between now and November combined with renewal
results significantly below expectations in that timeframe that would
cause the trust not to pay its final scheduled principal payment and to
defer a portion to subsequent years.

SECURITY

The bonds are secured by a pledge of revenue agreement rights including
all revenues associated with these rights and the right to enter into
renewal/replacement agreements.

CREDIT UPDATE

From December 2013 through November 2014, the trust has paid or is
scheduled to pay $12,683,000 in principal, interest and other
debt-related fees. Cash currently in place and revenues locked in from
December 2013 through November 2014 - when the final principal payment
is made - pursuant to suite and advertising contracts totals
$13,580,972. Therefore, DAT should be able to make the final scheduled
payment on the notes from current locked-in cash by a factor of 1.07x,
absent unexpected suite defaults between now and then. In addition to
locked-in revenue, DAT is expecting to generate an additional $4.8
million in renewal results and other suite sales - including a
conservative assumption of a 25% haircut on renewals scheduled to be
executed this coming year - which would enhance coverage to 1.49x.

Denver Arena Trust is a business trust formed for the purpose of
acquiring all of the rights, title and interest in the revenue
agreements and pledged contracts associated with the notes, the proceeds
of which were used for the construction of the Pepsi Center. The Pepsi
Center is currently owned and operated by the Kroenke Arena Company,
which is in turn owned by Kroenke Sports and Entertainment, LLC. The
arena seats up to 19,000 for hockey and 20,000 for basketball. The arena
opened in October 1999 at a construction cost of approximately $180
million. The Avalanche and Nuggets have leases to play all home games at
the center through 2024.

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